South Korean banks withdraws services to anonymous crypto accounts

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Representatives from the South Korean banking industry have said they will limit services to cryptocurrency traders who haven’t converted to real-name accounts, in a move designed to shake up the 50 to 60% of accounts that still remain unverified.

Seven months ago, the law in South Korea changed to require crypto traders to do so through real-name accounts, part of a series of measures design to tighten the rules around cryptocurrency exchanges and transactions. Yet despite the change in the law, only around half of accounts at leading exchanges have successfully converted into real-name accounts.

In an interview with Money Today, a South Korean banking official said they would eventually consider applying both deposit and withdrawal limitations on accounts that are still not verified in accordance with the law. According to the official, “Although the name verification service has been in operation [for] more than half a year since its inception, the conversion rate to the real-name verified accounts for each exchange site is only 40 to 50%.”

“Banks will take measures to limit services unless they (customers with virtual accounts) switch to real-name verified accounts by a certain date. After a certain point in time, [if] new real-name verified accounts are not issued, some restrictions on the Korean won deposit/withdrawal will be considered,” the report stated.

The official said that without a real-name verified account, accounts are seen as a higher money laundering risk, and that crypto exchanges and banks should continue to work as quickly as possible to convert virtual account users into real-name accounts.

According to the report, these measures could be applied by the banking industry as soon as November.

Several Korean exchanges have been taking proactive measures to encourage conversions. Bithumb has applied a lower daily withdrawal limit to non-verified accounts as an incentive to verify, while rival exchange Upbit has been running cash giveaways to encourage their users to switch to real-name accounts.

The move could see all four of Korea’s main exchanges eventually restricting non-verified users, including enforcing restrictions to account deposits and withdrawals at some point in the near future.